She accused her ex-husband of abuse. She’s still stuck with his student loans. – Mother Jones
When Michelle and her husband divorced, a judge separated their assets. She got the TVs. He got the gas grill and the freezer. Most of their debts were shared, and in many cases split equally between the two.
But one debt proved harder to sever: her student loans. When they were married, they had combined their existing student debt into what is known as a Spousal Consolidation Loan. First made available by an act of Congress in 1993 and taken off the market in 2006, this obscure financial product allowed married couples to convert their separate educational loans into a single, joint liability.
“The pitch was very much, you know, ‘It’s going to lower your payments,'” Michelle recalls.
But spousal consolidation loans had a catch: there’s no mechanism to separate the two borrowers’ loans, even if a marriage breaks up. So did Michelle, who was repeatedly beaten by her then-husband, according to a lawsuit in court. After he allegedly verbally abused her and threatened to hit her again, Michelle obtained a protective order against him and filed for divorce. In a lawsuit, Michelle’s then-husband denied the abuse allegations.
Michelle, whose name was changed in this article, was eventually able to divorce, but the loans remained consolidated and became a tether to a relationship she had tried so hard to leave.
The number of people in situations like Michelle’s is relatively small. Mother Jones previously reported that there are only 776 borrowers with spousal consolidation loans that are yet to be repaid or are expected to be repaid in the future — a small fraction of them 45 million borrowers with student debt. Not all of those 776 borrowers are divorced, but many report problems accessing debt relief initiatives such as the federal program, which makes loans to people employed in public service-oriented jobs. But for the divorced — and especially borrowers who have experienced abusive marriages — these loans can present particularly onerous challenges.
“This was a very unique product that was developed, and the fact that you can’t separate them — I’m not aware of any other product that was developed this way,” says Persis Yu, policy director at Student Borrower Protection Center. “They stopped making these loans in 2006, so these are really old loans at this point.”
Because the law that created spousal consolidation loans makes both borrowers liable for the entire debt even after a divorce, ex-spouses must “work together to make payments,” Yu notes. “Domestic violence is a really big problem with these loans. These loans can actually put survivors of domestic violence in a very vulnerable situation.”
Michelle says the consolidated debt has become a way for her ex-husband to remain in control of her life. The divorce decree stated that Michelle would be responsible for the credits she had accumulated for her pre-consolidation education, while the ex-husband would be responsible for the credits he had accumulated. But legally, the loans remained a single debt with a single monthly bill, and actually making the payments became a point of contention. Concerned about the impact of delinquent debt on her credit score and career, Michelle felt an obligation to keep up with the payments. But to do that, she had to interact with her ex-husband.
Michelle’s ex only made part of the payments, she says Mother Jones. “I would call him and say, ‘Hey, the loan payment is due. I have to come over and get the payment,’” she says. Occasionally, her ex-husband gave her a check or money order. Other times, Michelle says, he didn’t make any payments at all. “Mostly I tried to call, he didn’t answer. I would try texting, he wouldn’t answer. In a lawsuit, Michelle’s attorneys stated that the ex-husband has not made any payments since 2017 and that he only contributed about $1,600 in total to the loan after the divorce, while Michelle paid more than $60,000. In his own filing, Michelle’s ex denied those allegations and claimed he paid his share of the debt.
Eventually, Michelle saw the lack of cooperation as a continuation of the abuse she experienced during her marriage. “I found out over the past few years that because he was still holding the cards, it was a way for him to abuse him,” she says. Her ex-husband denied at times that he ever had student debt.
“He just said to me, ‘These are yours.’ He would use it to mock me. You know, ‘What are you going to do? What will you do? You won’t have me to run around chasing those loans anymore… What will you do? They are yours.’ And was just mean. He would insult me.”
Another borrower, Catherine, told the story Mother Jones that their consolidated student loans were also a major challenge. (Catherine’s name has been changed, like Michelle’s, for this article.) Catherine ended her marriage after learning of ongoing investigations into her ex-husband for the manufacture of child pornography. He eventually pleaded guilty and is currently serving a lengthy sentence.
During the marriage, Catherine says her ex-husband controlled both of their finances and consolidated the couple’s student loans. According to verified tax liens, he accumulated significant debt for unpaid federal taxes both during and after their marriage Mother Jones. When they were married, Catherine and her ex-husband had filed jointly, meaning Catherine was jointly liable for her ex-husband’s tax bills. For taxes, Catherine said she could get relief, however The IRS Innocent Spouse Assistance Program, which ultimately freed them from a significant portion of that debt. In contrast, there is no similar program for spousal consolidation loans and no debt separation method.
Currently, Catherine says, she pays monthly student loans for herself and her ex-husband. The Biden administration’s student-loan pause didn’t apply to her, she says type of loan She has. Catherine repays the loans on an income-based repayment plan that requires her to certify her income each year. And although her loan manager allows her to do so without revealing any information about her ex, Catherine found the process traumatic.
“It’s emotionally draining every time,” says Catherine. “Each year when I have to go through the income-tested repayment, I have to tell my story … to the loan servicer because they don’t read the notes. And so I have to go through with all the chatter about my ex not having to sign anything, I don’t have to give you my ex’s income.”
“It’s just very emotional to have to go through that every year,” adds Catherine, “just knowing that I’m paying that debt to the person who… harmed me.”
There are bipartisan ones legislation in Congress that would allow spousal consolidation loans to be segregated based on the portion originally owned by each borrower. A spokesman for Sen. Mark Warner (D-Va.) said Mother Jones that he and other co-sponsors are “actively involved in discussions with our colleagues and hope that we can move the bill into law soon towards its long overdue passage.” Catherine, who has a government job, says the measure could be life-changing because it could allow her to erase her debt under the government loan forgiveness program.
The student loans are “the only thing that will haunt me, it will hang over me for the rest of my life if I can’t do it [the] Public Service Forgiveness Program,” says Catherine.
Separating consolidated loans isn’t always as easy as splitting up who originally borrowed how much, especially for people like Michelle, who says she made more payments than her ex-husband. “I have no idea how they would ever manage to break them up,” says Michelle.
Despite this, Michelle says that separating the loans would bring her significant relief, both because she would not have to interact with her ex-husband and because it would be easier to get the loans that the government forgiven. “Every time I have to make a payment every month, it reminds me that I was abused,” she says. “I fought to get out of there. And I’m still attached to it.”